Confusion mars Imperial Bank recovery

Confusion reigns over a court ruling issued last week over engagement between Imperial Bank (In Receivership) shareholders and the Central Bank of Kenya, with both parties seemingly reading from different scripts.

In a statement on Friday, Imperial Bank shareholders accused the banking regulator of distorting the High Court ruling to carry on with plans to liquidate the bank.

This even after the November 4 ruling by Justice George Odunga urged both parties to work together to craft a credible revival bank to save the bank from imminent collapse.

The Imperial Bank shareholders concerns are drawn from a statement on Tuesday with the Central Bank interpreting the ruling to mean that it was now free to continue with assessing the bank’s assets and transferring them to raise funds to pay off depositors.

The banking regulator in its statement said that NIC Bank, which was appointed as the assets and liabilities consultant, would go ahead with assuming part of the bank’s assets and staff.

“The distortion of the Court’s ruling in the Press Releases is a matter of grave concern. It goes against both the Court’s Order that CBK and KDIC act transparently and constructively in relation to the receivership, and the duties of care which the Court expressly found CBK and KDIC to owe,” the shareholders said in a statement in the dailies.

At the same time the shareholders have challenged both the CBK and the Kenya Deposit Insurance Corporation to provide information about the conduct of the receivership, the arrangements entered into with Kenya Commercial Bank, Diamond Trust Bank and NIC Bank that have been involved in settling depositors’ payments.

The enquiry will also extend to obtaining information about any other parties who expressed interest in the bank and for disclosure of much greater detail about the financial status of the Bank at the time of its closure.

“The Shareholders will also seek information from CBK and KDIC about how the bondholders and depositors are to be dealt with. The Court has ordered CBK and KDIC to provide this information,” the shareholders added.

The confusion further strains relations between the two parties who have been locked in a visous legal battle.

The Central Bank has repeatedly challenged shareholders to provide an acceptable recovery plan with the regulator keen to get shareholders to inject Sh45 billion into the bank to have it reopened.

The shareholders (made up of Imaran Limited, Kenblest Limited, Abdumal Investments Limited, Reynolds Limited, EA Motor Industries (Sales & Service) Limited and Momentum Holdings Limited) however argue the demand was ridiculous.

CBK and KDIC have moved to court seeking to freeze and recover shareholders assets to revive the bank.